Westpac is forecasting 200,000 jobs will be lost in NZ as a result of the response to the coronavirus pandemic. Chief economist Dominick Stephens estimates economic activity during the four week lock-down would decline by a third, despite the government and the Reserve Bank having “done a lot to calm financial markets”.
Stephens said his feeling was that GDP in the three months to June would fall by more than 10%— “which is completely unprecedented in our lifetimes”.
The Westpac diagnosis reinforces the argument advanced by Point of Order in one of its most intently read posts: “After the lock-down the economy’s recovery will be dependent on dairy farmers and their milk”.
This post stressed that when the time comes for the government to start planning how the economy can recover, it should be working hard to ensure the dairy industry, along with other key pillars of the primary sector, gets every encouragement to increase production.
Many of those who read the post agreed that the volume of criticism dairy farmers had to absorb because of the methane emissions of their herds and the dirtying of rivers and streams reached absurd levels and affected industry morale.
Even early into the lock-down, ministers should be calling on their top advisers to find ways to trigger a rapid, and lasting, expansion of those key exports which have for so long been vital in sustaining the country’s standard of living. The hard truth is that, given the loss of tourist industry receipts, NZ will find it almost impossible to repay the debt now being incurred within a generation from the impact of the Covid-19 pandemic, unless it can substantially increase overseas income from elsewhere in the export sector
Stuff reported Finance Minister Grant Robertson as saying that a nation-building-type programme would be a significant element of future policy, when it comes to economic recovery over both the medium, and long, term He has tasked Regional Development Minister Shane Jones and Transport Minister Phil Twyford with finding infrastructure projects that could be pulled forward to boost economic activity and employment.
The problem with that is NZ may have run out of borrowing capacity to fund those kind of projects—unless lenders have some confidence they are going to be repaid.
Stuff went on to report Robertson as being reluctant to expand on his thinking— but he did concede NZ will have to reassess fundamentally what is done on these shores. Infrastructure and housing programmes take time to plan and design before contracts can be let and workers employed.
Expansion of existing export industries will start yielding cash directly. And there is plenty of scope to do this if the right techniques are encouraged. Scaled-up hydroponics could vastly increase horticulture output.
Dairy production could also be boosted if the techniques of the smartest farmers were applied to those further down the chain and more irrigation schemes were built.
Then, too, the government could step back , for the time being, from its punitive proposals on freshwater regulation. For that matter, why doesn’t the government moderate its GM stand so that scientists can find through gene editing the best clovers and grasses, as well as the most productive animals, to ensure higher output from the land?
Why isn’t Agriculture Minister Damien O’Connor in the vanguard promoting the elevation of agricultural industries to spearhead economic recovery? There’s little need to be concerned, as climate change warriors were, about methane emissions, because the collapse of the global tourist industry means carbon emissions from airlines, the worst polluters of all, have dropped so dramatically that most countries will now hit their Paris targets.
In the immediate stage, for the dairy industry, production may be tailing off because of drought in some of the country’s major dairying regions. Yet with the exchange rate moving in the favour of exporters the government should be active in urging farmers in other regions less affected by drought to extract the maximum output from the feed available.
As in wartime farmers will respond in what is the nation’s worst economic crisis, provided they believe there is real leadership coming from the top.